MGM Energy (T.MGX) down 20% on Paramount (T.POU) buyout proposal

Stockhouse Editorial
2 Comments| March 11, 2014


MGM Energy Corp. (TSX: T.MGX, Stock Forum) said Tuesday it has received a $50 million proposal from Paramount Resources Ltd. (TSX: T.POU, Stock Forum) that would result in Paramount purchasing all of the MGM shares not currently owned by Paramount.

Paramount currently owns 54.1 million MGM common shares or 13.9% of the issued and outstanding shares.

Clayton Riddell, CEO of both Paramount and MGM Energy, currently owns 122.8 million shares of MGM Energy or 31.6% of the outstanding shares.

Riddell has indicated to Paramount that he would support this transaction as it relates to his holdings in MGM Energy common shares, MGM said in a press release.

MGM Energy shares fell 22.5% to 15.5 cents on Tuesday, leaving a market cap of $62.2 million, based on 388.8 million shares outstanding. The 52-week range is 35 cents and 4 cents. Paramount eased 1.1% to $45.

MGM Energy is a Canadian oil and natural gas exploration and development company active in Northern Canada.

News of the offer comes after MGM failed to find a partner to help finance a shale oil prospect in the Northwest Territories.

Under the proposal, all shareholders of MGM Energy would receive on Class A common share of Paramount for every 300 common shares of MGM Energy. Based on the current trading price of Paramount common shares on the TSX of approximately $45 per share, this represents $0.15 per MGM Energy common share.

Tags: OIL & GAS E&P ENERGY

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SiftThruBS
MGM Energy management's responsibility is to act in the best interests of shareholders, including enhancing shareholder value. Every time MGM Energy issues a media release the value plummets. Hmmm, key players involved with both Paramount and MGM Energy.
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March 12, 2014
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SiftThruBS
Paramount is not the only one interested in purchasing this company and / or the value of the assets.
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March 12, 2014
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